Purchasing and Commodity Strategy

Topics: Strategy, Management, Organization Pages: 3 (805 words) Published: September 22, 2013
Purchasing is at the heart of any supply chain. Purchasing needs to be a strategic to facilitate an effective supply chain. Interest in strategic planning, its contribution to an organization long-term success and survival, the tools for developing the strategic plan, and the sub-strategies available have drawn much important over the past twenty years.

Every corporate has someone who is responsible for buying goods or services. In the smallest of companies perhaps the president or a secretary may place the orders. If the volume of the purchase is low the order may be placed with little comparison shopping. No attempt is made to negotiate the price. There is often an unnecessary increase cost for many items purchased. As the company grows the methods used do not always change to adapt to the growth. The same personnel may handle the buying and use the same or similar methods that were more appropriate for a smallest operation.

Certainly the purchasing and supply function, as a major decision area in the allocation of most organizations resource stream, should be a major player in developing an overall strategy. The key question is, How can the organizational objectives and strategy properly reflect the contribution and opportunities offered in the supply arena. Corporate planning may be described as the careful systematic making of strategic decisions. Corporate planning is concerned with developing a long-term view of future developments and designing a plan so that the organization can achieve its chosen objectives. It means that companies need to prepare "scenarios", or forecasts of future developments in the environment in which they wish to a successful outcome in the future. Changes are taking place at a more rapid rate, but often the effects of decisions made now may still be influential more that 10 years later. Companies, therefore, have been developing more sophisticated techniques to analyses the risks involved in such decisions. Additional...
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